Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 5
CASE NO.:
Appeal (civil) 4377 of 2005
PETITIONER:
Jainhind Roadways
RESPONDENT:
Maharashtra Rajya Mathadi Transport and General Kamgar Union and Ors.
DATE OF JUDGMENT: 30/09/2005
BENCH:
Arijit Pasayat & C.K. Thakker
JUDGMENT:
JUDGMENT
ARIJIT PASAYAT, J.
All these appeals have a common matrix in a judgment rendered by a Division
Bench of the Bombay High Court dismissing the appeals filed by the present
appellants which were filed against judgments of learned Single Judge.
Factual background needs to be noted in brief:
Around 1980 the All-India Transport Employees Association (in short
‘association’) raised dispute relating to certain general demands including
pay-scales, dearness allowance etc. In relation to employees employed with
various transporters having establishment all over India. The dispute was
referred by the appropriate Government on 12th August, 1981 under Section
10(1)(d) of the Industrial Disputes Act, 1947 (in short ‘the Act’) for
adjudication. Initially the reference was in respect of 259 employers.
Subsequently, by a corrigendum issued on 25.2.1982 116 more employers were
included in the reference. A common award was made by the Industrial
Tribunal on 12th November, 1986. Award was challenged by some of
transporters and the union representing some of the workmen by filing writ
petitions. By common judgment dated 11th November, 1992 the writ petitions
were disposed of by the High Court remanding the reference to the
Industrial Tribunal. The High Court found that the Tribunal instead of
fixing fair wages had fixed minimum wages as the wages payable to the
concerned workmen. When the matter was taken by the Tribunal afresh, all
the 28 transporters and the workmen appeared before the Industrial
Tribunal. Two unions which are respondent nos. 1 and 2 herein appeared
before the Tribunal taking the stand that they were representing the
workmen. While the matter was pending before the Industrial Tribunal it was
brought to the notice of the Tribunal that the concerned workmen had
entered into settlements with the employer-transporters and request was
made to dispose of the reference accordingly. This plea was resisted by the
respondent nos. 1 and 2-unions. The Tribunal did not accept the settlement
by holding as follows;
"The settlement if arrived with coercive under influence, by fraud
or by corrupt practices and adopting malafide and by inducement
then it should be examined...... In these settlement the basic
wages are fixed at the rate of minimum wages as notified in 20th
July 1994 giving increments. In these settlements there is no
dearness allowance agreed between the workers and employer
respectively. Even the demand of transfer subject to consultation
with union has not been agreed. In other words during the pendency
and at the final stage of the proceeding these settlements have
arrived and given goodbye to all the demands...If these settlements
are accepted then in other words the minimum wages are allowed to
be paid. As the lordship in W.P. has observed that the Tribunal has
to fix fair wages, and not the minimum wages. The Government
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 5
machinery has to fix the minimum wages and not the Tribunals or
court of law, to fix the minimum wages.’’
The Tribunal fixed the wages which according to it were the fair wages. The
award was assailed by filing writ petitions in the High Court under Article
226 of the Constitution of India, 1950 (in short ‘the Constitution’).
Before the learned Single Judge in certain cases the affidavits of the
workers concerned were filed stating that the dispute with the employer was
settled and they were agreeable to the wages settled under the settlement.
The learned Single Judge, however, was of the view that the Tribunal’s
judgment did not warrant interference as the Tribunal was bound to answer
the reference in terms of the order of the High Court. Appeals were
preferred before the Division Bench. By the impugned common judgment they
were dismissed.
In support of the appeals, learned counsel for the appellants submitted
that the approach of the Tribunal and the High Court is clearly erroneous.
The concerned workmen never questioned fairness or terms of the settlement.
The respondent nos. 1 and 2-union who had no locus standi to raise any
dispute made some suggestions in that regard. As a matter of fact, there
was no material placed before the Tribunal to show that the settlements
were tainted. It is a settled position in law that where question is raised
about the fairness of a settlement a separate industrial dispute is
contemplated. In the absence of any material or reference the Tribunal was
not justified in holding that the settlements were not legal. The
vulnerability of the Tribunal’s award and the judgments of the learned
Single Judge and the Division Bench is apparent from the fact that in
respect of one transporter-employer the settlement providing for identical
scales of a wages was accepted. No reason has been indicated by the
Tribunal as to why a departure was made in the case of the appellants. With
regard to the locus standi of respondent nos. 1 and 2 it is pointed out
that in the writ petitions before the High Court a clear plea was taken
that they had no locus standi to represent the workmen. Specific reference
was made to the following averments:
"10. The petitioners state that none of their employees are members of
either the Respondent No. 1 or the Respondent No. 2 nor were Respondents
No. 1 and 2 in existence in 1981.
11. The Petitioners state that the All India Transport Employees
Association has ceased to exist and in the aforesaid reference, the
Respondent No. 1 and 2 Union caused their appearance claiming to represent
the employees of all the Transport Operators."
It is pointed out in the counter-affidavit filed before the High Court the
stand of the present respondent nos. 1 and 2 can be culled out from the
following statement:
"With reference to paragraph 1 to 11, I say that no comments are called
out."
In response, learned counsel for the respondent nos. 1 and 2 submitted that
under industrial law the role of the union is clearly recognized. They
symbolize collective bargaining for the welfare of its members. It is
submitted that well recognized principle in law is that if a settlements is
factually found to have been arrived at with coercion, undue influence or
fraud or by corrupt practice or adopting malafides or by inducement then
the Tribunal can by examining the factual position ignore the settlements.
It is further submitted that the factual position clearly shows that the
possibility of an adverse decision may have operated as a positive force
for the so-called settlement.
The effect of settlement has been considered by this Court in several
cases. In The Sirsilk Ltd. and Ors. v. Government of Andhra Pradesh and
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 5
Anr., [1964] 2 SCR 448 it was observed at page 453 as follows:
"The contention on behalf of the appellant in the alternative is this. It
is said that the main purpose of the Act is to maintain peace between the
parties in an industrial concern. Where therefore parties to an industrial
dispute have reached a settlement which is binding under s. 18(1), the
dispute between them really comes to an end. In such a case it is urged
that the settlement arrived at between the parties should be respected and
industrial peace should not be allowed to be disturbed by the publication
of the award which might be different from the settlement. There is no
doubt that a settlement of the dispute between the parties themselves is to
be preferred, where it can be arrived at, to industrial adjudication, as
the settlement is likely to lead to more lasting peace than an award, as it
is arrived at by the free will of the parties and is a pointer to there
being goodwill between them. Even though this may be so, we have still to
reconcile the mandatory character of the provision contained in s. 17(1)
for the publication of the award to the equally mandatory character of the
binding nature of the settlement arrived at between the parties as provided
in s. 18(1). Ordinarily there should be no difficulty about the matter, for
if a settlement has been arrived at between the parties while the dispute
is pending before the tribunal, the parties would file the settlement
before the tribunal and the tribunal would make the award in accordance
with the settlement."
Similarly in The State of Bihar v. D.N. Ganguly and Ors., [1959] SCR 1191
it was observed as follows:
"It is, however, urged that if a dispute referred to the industrial
tribunal under section 10(1) is settled between the parties, the only
remedy for giving effect to such a compromise would be to cancel the
reference and to take the proceedings out of the jurisdiction of the
industrial tribunal. This argument is based on the assumption that the
industrial tribunal would have to ignore the settlement by the parties of
their dispute pending before it and would have to make an award on the
merits inspite of the said settlement. We are not satisfied that this
argument is well-founded. It is true that the Act does not contain any
provisions specifically authorising the industrial tribunal to record a
compromise and pass an award in its terms corresponding to the provisions
of order XXIIII, r. 3, of the Code of civil procedure. But it would be very
unreasonable to assume that the industrial tribunal would insist upon
dealing with the dispute on the merits even after it is informed that the
dispute has been amicably settled between the parties. We have already
indicated that amicable settlements of industrial disputes which generally
lead to industrial peace and harmony are the primary objects of this Act.
Settlements reached before the conciliation officers or boards are
specifically dealt with by sections 12(2) and 13(3) and the same are made
binding under section 18. There can, therefore, be no doubt that if an
industrial dispute before a tribunal is amicably settled, the tribunal
would immediately agree to make an award in terms of the settlement between
the parties. It was stated before us at the bar that innumerable awards had
been made by industrial tribunals in terms of the settlements between the
parties. In this connection we may incidentally refer to the provisions of
section 7(2)(b)of the Industrial Disputes (Appellant Tribunal) Act, 1950
(XLVIII of 1950), which expressly refer to an award or decision of an
industrial tribunal made with the consent of the parties. It is true that
this Act is no longer in force; but when it was in force, in providing for
appeals to the Appellate Tribunal set up under the said Act, the
legislature had recognized the making of awards by the industrial tribunals
with the consent of the parties. Therefore, we cannot accept the argument
that cancellation of reference would be necessary in order to give effect
to the amicable settlement of the dispute by the parties pending
proceedings before the industrial tribunal."
Whether the settlement is tainted or unfair has to be decided if specific
reference is made on that aspect. In National Engineering Industries Ltd.
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 5
v. State of Rajasthan and Ors., [2000] 1 SCC 371 at para 24 it was observed
as follows:-
"It will be thus seen that the High Court has jurisdiction to entertain a
writ petition when there is an allegation that there is no industrial
dispute and none apprehended which could be the subject-matter of reference
for adjudication to the Industrial Tribunal under Section 10 of the Act.
Here it is a question of jurisdiction of the Industrial Tribunal, which
could be examined by the High Court in its writ jurisdiction. It is the
existence of the Industrial Tribunal (sic dispute) which would clothe the
appropriate Government with power to make the reference and the Industrial
Tribunal to adjudicate it. If there is no industrial dispute in existence
or apprehended the appropriate Government lacks power to make any
reference. A settlement of dispute between the parties themselves is to be
preferred, where it could be arrived at, to industrial adjudication, as the
settlement is likely to lead to more lasting peace than an award.
Settlement is arrived at by the free will of the parties and is a pointer
to there being goodwill between them. When there is a dispute that the
settlement is not bona fide in nature or that it has been arrived at on
account of fraud, misrepresentation or concealment of facts or even
corruption and other inducements it could be the subject-matter of yet
another industrial dispute which an appropriate Government may refer for
adjudication after examining the allegations as there is an underlying
assumption that the settlement reached with the help of the Conciliation
officer must be fair and reasonable. A settlement which sought to be
impugned has to be scanned and scrutinized. Sub-sections (1) and (3) of
section 18 divide settlements into two categories, namely, (1) those
arrived at outside the conciliation proceedings, and (2) those arrived at
in the course of concillation proceedings. A settlement which belongs to
the first category has a limited application in that it merely binds the
parties to the agreement but the settlement belonging to the second
category has an extended application since it is binding on all the parties
to the industrial disputes, to all others who were summoned to appear in
the concillation proceedings and to all persons employed in the
establishment or part of the establishment, as the case may be, to which
the dispute related on the date of the dispute and to all others who joined
the establishment thereafter. A settlement arrived at in the course of
concillation proceedings with a recognized majority union will be binding
on all workmen of the establishment, even those who belong to the minority
union which had objected to the same. The recognized union having the
majority of member is expected to protect the legitimate interest of the
labour and enter into a settlement in the best interest of the labour. This
is with the object to uphold the sanctity of settlement reached with the
active assistance of the Concillation Officer and to discourage an
individual employee or a minority union from scuttling the settlement. When
a settlement is arrived at during the concillation proceedings it is
binding on the members of the Workers’ Union as laid down by Section 18(3)
(d) of the Act. It would ipso facto bind all the existing workmen who are
all parties to the industrial dispute and who may not be, members of unions
that are signatories to such settlement under Section 12(3) of the Act. The
Act is based on the principle of collective bargaining for resolving
industrial disputes and for maintaining industrial peace. ‘‘This principle
of industrial democracy is the bedrock of the Act,’’ as pointed out in the
case of P. Virudhachalam v. Lotus Mills, [1998] 1 SCC 650. In all these
negotiations based on collective bargaining the individual workman
necessarily recedes to the background. Settlements will encompass all the
disputes existing at the time of the settlement except those specifically
left out."
The position was recently examined in State of Uttaranchal v. Jagpal Singh
Tyagi Civil Appeal No. 6505 of 2004 decide on 31st August, 2005. It was
held as follows:
"Learned counsel for the appellant State submitted that there was
nothing on record to show that there any pressure put on the
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 5
respondent employee or that undue influence was exercised. The
conclusion was arrived at without pleadings in this regard. For the
first time in the counter affidavit filed before the High Court,
stand to that effect was taken. Without any material to support the
contention, the High Court held that the settlement was not proper
and in order to frustrate the order passed by the High Court, the
same was arrived at. The effect of the affidavits and the
undertaking was totally ignored.’’
We find there was really no issue raised regarding fairness of the
settlement. The Tribunal as well as the High Court came to conclusions
without any material that settlements were not fair. As noted in National
Engineering case (supra) and State of Uttaranchal’s case (supra) there has
to be a specific reference in this issue which was not there before the
Tribunal and in any event no material was placed or any positive stand
taken by any workman.
In the aforesaid background the orders of the learned Single Judge and the
Division Bench of the High Court as well as that of the Tribunal are set
aside. The Tribunal shall decide the matter within six months from the date
of receipt of a copy of the judgment. If however, a competent person raises
a dispute regarding fairness of the settlement within a month from today
before the appropriate Government with a copy of our judgment the same
shall be examined within two months from the date the dispute is raised. It
shall take a decision whether a reference is called for. We make it clear
that we have not expressed any opinion on the desirability or otherwise of
making the reference.
Needless to say while deciding the question both on the desirability of
making the reference or answering the reference the appropriate Government
and the Tribunal, as the case may be, shall examine the locus standi of
person seeking reference and/or the acceptability of the stand.
At this juncture it is to be noted that the Tribunal dealt with the cases
which are the subject-matter of CA Nos. 4381 and 4382 of 2005, by treating
them at par with other cases though there was no settlement in those cases.
The Tribunal shall deal with these tow cases separately.
The appeals are accordingly disposed of with no order as to costs.